Financial Markets…High-yielding European government bonds rallied on Thursday, pushing their borrowing costs to multi-year lows, amid growing speculation that the European Central Bank will provide further monetary stimulus to bolster a slow economic recovery. Spanish 10-year bonds gained for a fifth day, sending yields to a new eight-year low of 3.271%. Italian 10-year yields fell to as low as 3.29%, the lowest level since September 2005, while comparable Portuguese yields fell to a four-year low of 4.091%. Italian government plans to sell as much as €10 billion ($13.8 billion) of debt tomorrow.

Ukraine reached a preliminary deal with the International Monetary Fund for a two-year loan of $14 billion to $18 billion, which will be the nation’s third rescue package from the IMF since 2008. As part of the IMF deal, Ukraine agreed to significant fiscal tightening, with a target of narrowing the budget deficit to 2.5% of GDP by 2016, and a shift to a flexible exchange rate and inflation targeting. The IMF agreement is set to unlock a planned $27 billion of international aid from the European Union, the United States, and other lenders over two years.

High Income Economies…U.S. GDP growth in Q4 2013 was upwardly revised from the earlier estimate of 2.4% (q/q saar) to 2.6%, which is significantly lower than Q3’s 4.1% increase. The smaller-than-expected upward revision primarily reflected a larger than previously estimated increase in consumer spending, which was partly offset by downward revisions to non-residential fixed investment and to private inventory investment.

At the same time, U.S. first time jobless claims unexpectedly fell to 311,000 in the week ended March 22nd, a decrease of 10,000 from the previous week's revised figure of 321,000. With the unexpected decrease, jobless claims more than offset the increase seen in the previous week, falling to their lowest level since hitting 305,000 in the week ended November 30th. The four-week moving average dropped from the previous week's revised average of 327,250 to 317,750, its lowest level since September. Meanwhile, continuing claims also fell to 2.82 million in the week ended March 15th from the preceding week's revised level of 2.88 million.

With manufacturers' assessment on order books and inventories improving, Italy's business confidence, as measured by the manufacturing confidence index, rose for a second straight month in March, from 99.1 in February to 99.2, the highest since June 2011.

Developing Economies…East Asia and Pacific: The Philippines’ central bank kept its key policy rate unchanged, but raised the reserve requirements by one percentage point, effective April 4, 2014, to absorb excess liquidity. Noting that the balance of risks to the inflation outlook continued to be to the upside, the central bank left the reverse repurchase rate at 3.5% as expected. The repurchase rate was also left unchanged at 5.5%.

Latin America and the Caribbean: Brazil’s unemployment rate rose for the second consecutive month to 5.1% in February, up from 4.8% in January, but lower than the 5.6% recorded in February 2013. Month-on-month, the number of unemployed persons rose 6.9% (m/m) over January, but fell 8.3% year-on-year. Average real wages rose 0.8% (m/m) and 3.1% (y/y) in February.

Sub-Saharan Africa: The South African central bank left the benchmark repo rate unchanged at 5.5% for the second consecutive meeting as expected, noting that upside risks to the inflation outlook persisted while the domestic economic growth environment remained subdued.